On the back of his shop Fabian made a safe and convenient to let the people found some of their coins in it as security deposit. He charged a small fee depending on the amount of money and the amount of time they stayed with him.
He was the owner of the coins, a receipt for each deposit.
When a person went shopping, it usually takes many gold coins. The person gave the merchant one of the receipts Fabian, depending on the value of the goods they wanted to buy.
Traders acknowledged the receipt as being genuine and accepted it with the idea of bringing then to Fabian and collecting the appropriate amount in coins. The receipts passed from hand to hand instead of transferring the gold itself. People had complete confidence in the "receipts" - and accepted them as if they were gold.
Before long, Fabian noticed that it was very rare that someone actually asked him his gold coins.
Bank Deposit
He thought, "here I am in possession of all this gold and I still have to work hard as a craftsman. It makes no sense. There are dozens of people who would be glad to pay me interest for the use of this gold, which is deposited here and owners rarely complain.
Loans
"True, gold is not mine - but in my possession, which is all that matters. I do not need to make more coins to pay, I can use some of the coins stored in the safe."
One day, a very large loan was requested. Fabian suggested, "Instead of carrying all these coins we can make a deposit in his name, and then I shall give you several receipts to the value of currencies." The borrower agreed, and went with a bunch of receipts. He had obtained a loan, but the gold remained in the safe Fabian. After the client left, Fabian smiled. He could have his cake and eat it too above. He could "lend" gold and still keep in their possession.
Friends, strangers and even enemies needed funds to carry out their businesses - and provided they could ensure the return, they could borrow as much as needed. Simply writing receipts Fabian was able to "borrow" several times as much money as the value of gold in his safe, and he even owned the money in it. Everything was safe so long as the true owners did not call for their gold and the confidence of the people were maintained.
Accounting entries
He kept a book showing the debits and credits for each person. In fact, the lending business was proving to be very lucrative.
His status in the community increased almost as fast as his wealth. He was becoming a man of importance, he demanded respect. In matters of finance, his word was like a sacred pronouncement.
source: economia.com.mx
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